Employees of India’s leading information technology (IT) companies who are facing a crack-down for ‘moonlighting’ recently received support from unexpected quarters. Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said that the IT employees of today have many opportunities to develop their skills working for start-ups or being entrepreneurs, so their employers must allow them to nurture this ‘entrepreneurial bug’. But the likes of Infosys and Wipro, who have been at the receiving end of this trend, have been unequivocal in saying that moonlighting for competitors represents an integrity issue and will result in a termination notice.

There is considerable merit in their stance. When an employee who has signed a contract for full-time employment with one company secretly engages to work for another, it is a clear violation of her contract terms which is prima facie illegal. Though moonlighting employees often argue that they pursue other assignments outside of office hours, it is difficult for any employer to monitor this. Attempts to police this would lead to a hostile work environment for honest employees who play by the book. Two, IT companies often work for competing clients in the same sector, so using the infrastructure, resources and training provided by one firm to undertake assignments for another, opens up a can of worms on data security, confidentiality and conflicts of interest. One can see why smaller firms or start-ups would be in favour of such unofficial talent sharing. While large companies with these employees on their payrolls would be footing the bill for their provident fund, gratuity, welfare payments and office amenities, smaller firms they moonlight for may get away with paying them a flat retainer, creating an unofficial cross-subsidy. Given all these issues, it is best that software employees who do want to work on side-gigs along with their main job, make upfront disclosures to their employer at the outset, so that the rules of engagement can be clearly laid out in their contract and their compensation structured accordingly. As a work-from-home environment adds to these challenges, employers need to unambiguously identify their core employee base which needs to work out of office.

That said, large IT companies also need to do some soul-searching on why their employees are scouting for extra work. One reason could be poor compensation levels, especially at the entry and mid-level. While pay for CXOs has soared to nine-digit figures, that for entry and mid-level employees hasn’t even kept up with inflation. Two, opportunities for moonlighting seem to crop up mainly in highly skilled job profiles such as digitisation, cloud computing and cyber-security where there’s a global scramble for talent. Here, companies may need to be open about engaging talent on consultancy contracts or one-off assignments. It is also up to the HR functions of IT firms to invest regularly in upskilling their employees and meeting individual aspirations on career growth, so that employees don’t feel they’re deprived of opportunities to grow.